Inheritance Tax Planning in the UK: A Guide for Global Families

When your wealth, assets, or family ties span more than one country, Inheritance tax (IHT) in the UK may seem complicated.

As an expat living in the UK, someone with property here, or you simply have loved ones affected by UK tax rules, knowing how IHT works is essential to avoid costly mistakes.

For global families, it’s about how much you own, where you live, how your estate is structured, and whether your planning keeps up with changing regulations. 

Let’s unpack and explore how international families can protect their wealth and plan ahead.

How Does Inheritance Tax Work in the UK?

If you’re building your wealth in the UK, through property, savings, or investments, it’s only natural to start thinking about what happens to it when you’re no longer around. 

For many expats and internationally mobile families, inheritance tax (IHT) in the UK is one of those topics that feels complicated, confusing, and easy to put off. But ignoring it could mean leaving your loved ones with a hefty tax bill, or worse, having your estate tied up in legal knots.

In the UK, inheritance tax is charged on your estate, that’s everything you own, when you die. 

The basic rule is this: if your estate is valued above £325,000 (known as the ‘nil-rate band’), anything above that threshold may be taxed at 40%. If you own property, especially in places like London or the Southeast, you could be over that limit without even realising.

The way your assets are structured, who they’re passed to, and whether they sit in trusts or abroad can all influence your IHT position.

You’re an Expat, Does Inheritance Tax Still Apply to You?

Living abroad doesn’t automatically exempt you from UK inheritance tax (IHT). From 6 April 2025, the UK has replaced the old domicile-based system with one based on “Long-Term Residency”. Under the new rules:

If you’ve lived in the UK for 10 out of the last 20 tax years, you are considered a long-term resident.

Long-term residents are liable to IHT on their worldwide estate, regardless of domicile.

If you leave the UK, the IHT exposure on overseas assets gradually reduces over time, three years after a 10–13 year stay, up to 10 years if you resided for 20 years.

So, even if you’re no longer “UK domiciled,” long-term residency alone can trigger worldwide inheritance tax. It’s less about where your roots lie, and more about how long you’ve been on UK soil.

This fundamentally changes the old rule that simply being non‑dom could shield many expatriates from global IHT exposure.

Simple Ways Global Families Can Start Planning Ahead

When your family and finances are spread across countries, inheritance tax planning becomes a lot more than just making a will. The earlier you start thinking about it, the more options you’ll have, especially if you’re trying to protect loved ones from unexpected tax bills.

One of the simplest places to begin is by getting a clear picture of your assets and where they’re located. That includes property, bank accounts, pensions, investments, and even life insurance. 

Another helpful step is to look into gifting. The UK lets you give away assets during your lifetime without them being taxed after you pass, as long as you survive seven years after the gift is made. That’s known as the seven-year rule, and it can be a useful tool for long-term planning.

You should also explore whether any double taxation agreements exist between the UK and your country of residence. These can help reduce or eliminate inheritance tax on the same assets being taxed twice.

Finally, it’s worth having a conversation with a financial adviser or tax expert who understands both UK and international tax laws. They can help you explore more advanced planning tools like trusts, life insurance structures, or restructuring your estate in a tax-efficient way.

Need a place to start? This overview of inheritance tax from the GOV.UK lays out the basics, including thresholds, exemptions, and how it all works.

What to Know about Cross-Border Estates Trusts

Trusts can seem like the perfect solution, something that keeps things tidy, private, and tax-efficient. But when it comes to cross-border estate planning in the UK, trusts aren’t always as straightforward as they look.

For starters, the UK treats certain trusts as ‘relevant property trusts,’ which can attract their own set of inheritance tax rules even while you’re still alive. This means the structure you set up in another country might not get the same tax treatment here in the UK.

You also have to consider reporting rules. If you’re a UK tax resident and have a connection to a non-UK trust, you might be required to declare it to HMRC. That includes details about the assets inside the trust, the people involved, and any income or gains.

And then there’s the issue of legal recognition. Not all countries recognise trusts in the same way. Something that works perfectly in one place might cause complications or be completely ineffective in another.

That’s why it’s so important to work with advisers who understand both sides of the border. Cross-border estate planning requires legal and tax coordination between jurisdictions, so your plan holds up no matter where your family ends up..

Conclusion

Inheritance tax might seem like something you can think about “later,” but planning early is one of the smartest moves you can make. 

You don’t have to figure it out on your own. Speaking with professionals who understand both UK and international rules can help you make clearer decisions. 

Sorting it out now means peace of mind later for you, and the people you care about most.